Vietnam’s logistics industry sees signs of recovery 

According to Vietnam’s General Statistics Office (GSO), in the first nine months of 2023, the total export and import turnover of goods reached US$497.66 billion, down 11 percent over the same period last year, of which exports decreased by 8.2 percent and imports decreased by 13.8 percent. This decline was reflective of a broader downturn in logistics-related services, including seaports, freight forwarding, warehousing, and overall transportation. However, there are now signs of recovery.

Ho Sy Hoa, head of research and investment consulting at DNSE Securities noted that the logistics industry has experienced substantial repercussions in recent years, especially in 2023, due to the global economic downturn and the domestic impact of the COVID-19 pandemic. He said the industry’s trajectory can be delineated into two distinct phases: an initial period of decline and a subsequent phase of recovery which the industry is undergoing now.

Ho Sy Hoa, head of research and investment consulting, DNSE Securities. Photo credit: DNSE.

The initial phase, characterized by industry weakness, spanned from the latter part of 2022 until the conclusion of the second quarter of 2023. This decline was attributed to the weakening of the global economy, particularly evident in major trading partners such as the U.S., EU and China. The GDP growth rates of these key nations diminished, accompanied by reductions in GDP, consumption and import-export turnover. 

Vietnam’s import-export turnover experienced significant contractions in three consecutive quarters, reaching its nadir with reductions of 6.9 percent, 13.8 percent, and 16.1 percent in Q4/2022, Q1/2023, and Q2/2023, respectively.

During the second phase, characterized as the recovery period for the logistics industry, commencing in the third quarter of 2023, notable signs were observed. The domestic economy is undergoing a revitalization, paralleled by a gradual resurgence in international trade activities. 

Import-export turnover, indicative of this positive momentum, commenced its recovery in July, demonstrating sustained positive growth rates in September and October. The rebound of the U.S. and Chinese economies has played a pivotal role in driving the recovery of the logistics industry during this phase.

GSO’s data for the first 10 months of the year revealed significant progress in freight transport, estimated at 1,888.3 million tons. This figure represented a substantial increase of 14.4 percent compared to the corresponding period in the previous year. The overall turnover in ton-kilometers reached 402 billion, marking an 11.4 percent upswing. 

Maritime and road transport, in particular, experienced the most robust growth rates, registering increases of 19.8 percent and 13.3 percent, respectively, in comparison to the same period last year. These indicators underscored the positive trajectory of the logistics industry’s recovery, with maritime and road transport emerging as key drivers of this notable upturn.

Indications of recovery were also seen in infrastructure investments, particularly in seaports, which serve as pivotal international trading hubs, as major global shipping companies are looking at investing in multi-billion dollar “super port” initiatives.

In terms of seaports, Vietnam presently holds the fourth position among ASEAN countries, boasting a capacity of 13.7 million TEUs for customs-cleared goods. 

Vietnam, with its highly favorable natural conditions and strategic geographical location, is well-positioned for the development of logistics services. The country’s coastline, extending approximately 3,260 km from north to south, places it at the heart of the Asia-Pacific region’s international maritime routes. 

As of October 2023, the infrastructure landscape comprises 296 ports nationwide, featuring port bridges spanning about 107 km—a fivefold increase since 2000. 

Three principal port areas cater to all regions of the country: northern region (Hai Phong port), central region (Da Nang and Dung Quat ports), and southern region (Cai Mep – Thi Vai port cluster).

Two ambitious “super port” initiatives in Can Gio and Vinh Phuc are poised to establish themselves as among the most expansive transshipment hubs in Southeast Asia. 

The Can Gio mega port, backed by a substantial investment of approximately $5.45 billion, boasts a port area spanning 571 hectares and a water surface area of nearly 478 hectares. 

Designed to accommodate mother vessels of up to 250,000 tons, it is projected to have a capacity of approximately 16.9 million TEUs. This mega port is anticipated to evolve into a comprehensive marine port system for the entire region, complementing the Thi Vai – Cai Mep port cluster in Ba Ria-Vung Tau.

Simultaneously, the Vinh Phuc mega port, known as the Logistics ICD Vinh Phuc center, initiated in late December 2021, represents a collaboration between two major corporations—T&T Group and YCH Group (Singapore). With total investment capital of VND 3,900 billion (US$160.7 million), at 83 hectares and a designed capacity for customs clearance goods reaching about 530,000 TEUs per year, this project is poised to emerge as one of the largest inland logistics centers in northern Vietnam. 

This port is strategically positioned to connect various industrial zones through road and rail infrastructure, linking with key locations such as Hanoi, Hai Phong International Airport, and Yunnan province of China.

In terms of air transport, the period from 2012 to 2019 recorded an explosive growth, averaging 18 percent per year. Although deeply affected by the COVID-19 pandemic, the industry has now rebounded and growth rate in October 2023 increased by 9.9 percent (which is almost double the GDP growth rate of Vietnam).

For road transport, it is helped by the nascent e-commerce industry, which accounts about 8.5 percent of total retail sales of goods and consumer service revenue. For the first 10 months of 2023, growth rate increased by 13.3 percent.

According to the Vietnam E-commerce Association, the market is expected to increase by 25 percent to $20 billion by the end of 2023 and is further expected to continue this high growth rate through 2025.

According to Ho Sy Hoa from DNSE Securities, the logistics industry has the potential to become one of the country’s leading sectors, contributing to the sustainable development of the economy. Nonetheless, the logistic industry is highly dependent on the global economic recovery.

According to the latest IMF forecast for 2024, the GDP growth of Vietnam’s main trading partners, i.e., the U.S., China, and EU, is projected to be 1.5 percent, 4.2 percent, and 1.2 percent respectively. Although not fully recovered, these are still positive signs, and therefore, the growth of Vietnam’s import-export turnover is also expected to be positive in 2024.

Consumer spending is expected to improve in late 2023 and early 2024, with inflation cooling down considerably in the U.S. and EU. The year-end holiday seasons and the coming Lunar New Year is expected to boost the export of textiles, footwear, and agricultural products.  

Domestically, GDP for 2024 is forecasted at 6.5 percent, and inflation is expected to fall between four to 4.5 percent. The government has signed 16 bilateral and multilateral trade agreements, with three more expected to be signed soon, which will be another boost to the logistics industry. 

Photo credit: iStock/ SunnyVMD

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